Japan's largest initial public offering (IPO) this year, Kyushu Railway, turned out to be just the ticket for the country's yield-starved investors, taking the fast track higher on its debut on Tuesday.
The stock jumped to as high as 3,120 yen ($29.88), or a 20 percent surge from its IPO price of 2,600 yen. It closed at 2,990 yen.
The company raised around 416 billion yen, or around $4 billion through the IPO as the government privatized part of its railway system, the first railway listing since the 1990s. JR Kyushu operates transport services on Japan's southern island of Kyushu, where Nagasaki is located.
Despite other listed railway plays tumbling this year – West Japan Railway's shares were down around 22 percent year-to-date – Kyushu Railway offered investors one key attraction: A forecasted dividend of around 75 yen, for a yield of around 3 percent. For investors such as Japan's archetypal Mrs. Watanabe, that compared favourably with the 10-year Japanese government bond yield, which was at negative 0.054 percent on Tuesday morning.
Analysts noted strong demand for yield.